Ben Rossiter-Turner; VP of Competition; Motorsport Games Inc
Stephen Hood; Chief Executive Officer; Motorsport Games Inc
Stanley Beckley; Chief Financial Officer; Motorsport Games Inc
Operator
Thanks you for standing by, and welcome to the Motorsport Games Inc. third quarter 2024 earnings call. (Operator Instructions) As a reminder, today’s conference is being recorded.
I would like to turn the conference over to Ben Rossiter-Turner from Motorsport Games. Please go ahead.
Ben Rossiter-Turner
Thank you, and welcome to Motorsport Games third quarter 2024 earnings conference call and webcast. On today’s call is Motorsport Games Chief Executive Officer; Stephen Hood; and Chief Financial Officer, Stanley Beckley.
By now, everyone should have access to the company’s third quarter 2024 earnings press release filed today after market close. This is available on the Investor Relations section of Motorsport Games’ website at www.motorsportgames.com.
During the course of this call, management may make forward-looking statements within the meaning of US federal securities laws. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Except as required by law, the company undertakes no obligation to update any forward-looking statements made on this call or to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Please refer to today’s press release and the company’s filings with the SEC, including its most recent quarterly report, Form 10-Q, for the quarter ended September 30, 2024, for a detailed discussion on certain risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.
In today’s conference call, we will refer to certain non-GAAP financial measures, such as adjusted EBITDA, as we discuss the third quarter 2024 financial results. You will find a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures as well as other related disclosures in the press release issued earlier today, which is also available on the Investor Relations section of Motorsport Games’ website at www.motorsportgames.com.
And now I’d like to turn the call over to Stephen Hood, Chief Executive Officer of Motorsport Games. Stephen?
Stephen Hood
Thank you, everyone, for joining this conference call today. Since our last conference call, work has diligently continued at Motorsport Games and our development team at Studio 397 to deliver improved player experiences against the backdrop of ongoing cost optimization. We continue to drive game revenues whilst reducing expenditure.
As announced last month, the company undertook further head count reductions aimed at reducing cash expenditure and streamlining operations. This was a necessary move to maintain our steadfast commitment to rightsizing the entire operation so that we can emerge stronger and ultimately prepared for success.
A reduction in personnel has not meant a reduction in productivity or progress, however. We believe we have struck the right balance between cost saving and the retaining of key staff and vital knowledge. The team we have today are more than capable of carrying this company into a new phase with continued product and technology growth, which will serve our customers, shareholders and clients.
In September, Le Mans Ultimate received its biggest update so far with large free feature updates alongside the second of our 2024 downloadable content, or DLC packs. An innovative co-op mode that I’ve spoken about regularly was delivered, offering a unique opportunity for racers to play together with friends at a pace that suits them in a play-by-mail gaming style and powered by our online platform RaceControl. This feature is not available in any other product on the market and something that we are particularly proud of and expect to make use of in partnership with some of our clients also seeking further opportunities for improved customer retention.
Players now have the opportunity to play one chapter of a story at a time of their choosing, which can only be a benefit in today’s hectic world where time to play is at a premium.
Whilst the underlying technology that powers our simulation online platform and gaming is incredibly strong, we realize the deployment of our experiences must be to the benefit of a wide range of gamers. F1 Arcade, powered by our technology, is a more recent example of high-end simulation technology being very much proven as pick-up and play.
Additionally, we delivered a feature that players have been asking for since day one, the ability to save a race and resume it in a race weekend game mode. As the simulation built to represent the 24 hours of Le Mans and the FIA World Endurance Championship, our product must be able to allow users to complete technically challenging endurance races in a way that suits them. And both this save-and-load feature and a co-op game mode fulfill this requirement.
Next up, we’re on the path to deliver real-time driver swaps in the new year expected in Q1 2025, which will continue to take our product to a new level. Players will be able to team up with friends and play in real-time races, sharing their car and in turn, experiencing shared moments that will further broaden the appeal of our newest game.
Pack two of our 2024 season pass for Le Mans Ultimate completed the Hypercar grid for players with the Isotta Fraschini and the Alpine LMDh, both with great support from the manufacturers. We expect our subsequent packs to generate greater interest as we bring the ever popular GT3 series cars to the game.
Data from another of our products, rFactor 2, historically shows these are by far our most popular vehicle class and we’re eager to see this translate into Le Mans Ultimate as we continue to bring the product up-to-date to match the real-world offering and changes in the sport.
Part of this major update is an extension to our RaceControl platform to enable new features and services as part of an optional subscription service. We made a commitment to expand the overall offering, and subscription plans are a part of that. We are conscious, however, of the never-ending stream of subscription services out there and intend for our offering to provide major value across our two pillar titles, rFactor two and the Le Mans Ultimate.
With every new game tapping into this to deliver unbeatable value, this service should go live next month and become a useful revenue stream. I must also make mention of our partnership with Kindred Concepts, creators and operators of the hugely successful F1 Arcade. They recently expanded to a fourth venue, the latest in Washington, D.C. This is a partnership that enables us to demonstrate the appeal of game and technology, and we’re hopeful of exploring more of what we can do together next year.
With every new venue opened, more players get to experience our racing simulation. We received additional per-seat license revenue from Kindred Concepts, and we position our technology as the pinnacle of single-seat racing.
As I hope you will have understood, I am upbeat about the potential future of this company, studio and its technology. Our announcement regarding strategic alternatives came about because the Board and I believe, with the right financing, we will have the opportunity to grow this business quickly and sustainably.
In the 18 months since I returned to this business with a mandate to steer a new course, we have made enormous progress: reducing debt, reducing cash spend and, at the same time, building, launching and cultivating an iconic product in Le Mans Ultimate.
Now I would like to invite Stanley Beckley, our Chief Financial Officer, to talk about the financial results for the third quarter of 2024.